Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

Which of the following represents a consumers budget constraint?

Options:

p1x1 + p2x2 ≥M

p1x1 + p2x2 = M

p1x1 + p2x2 ≤ M

p1x1 + p2x2 <M

Correct Answer:

p1x1 + p2x2 ≤ M

Explanation:

Given the prices of the goods and the income of a consumer, he/she can choose any bundle as long as it costs less than or equal to the income he/she has. In other words, the consumer can buy any bundle (x1, x2) such that p1x1 + p2x2 ≤ M